Business licenses and permits: what you need besides the LLC

Forming an LLC or corporation registers your business with the state. It does not, by itself, give you permission to operate. That comes from licenses and permits, and they can come from three levels of government at once.

Federal

Most small businesses need nothing federally. The exceptions are specific industries - things like alcohol, firearms, aviation, broadcasting, or importing certain goods. If your work is regulated at the national level, you will usually already know.

State

States license professions and trades: contractors, electricians, cosmetologists, real estate agents, healthcare providers and many more. Some require an exam and continuing education; some require a bond or proof of insurance. States also issue sales tax permits if you sell taxable goods or services.

Local

This is the layer people miss. Many cities and counties require a general business license to operate within their limits, even for a home-based business. Zoning rules may decide whether you can see customers at home, put up a sign or park a work vehicle. Food, childcare, and anything involving the public's health usually needs a local inspection.

How to find what applies to you

1. Start with your state's business portal - most list licenses by industry. 2. Check your city and county websites for a business license and zoning section. 3. Search your trade's state licensing board. 4. Ask: will I sell taxable goods or services? If yes, register for sales tax before your first sale.

Renewals are the trap

Licenses expire. Some renew yearly, some every two years, some on your birthday rather than the business's anniversary. Put every renewal date in one calendar the day you get the license.

A note on names

Your license may need to match your legal business name exactly - including LLC or Inc. If you trade under a different name, you may need a DBA filing as well, so the name customers see and the name on the license connect.

Getting this right at the start costs a few afternoons. Getting it wrong can mean fines, voided contracts or being told to stop work until it is fixed.